Back to Energy Industry September 8, 2014

A lesson in negotiation

Nord Stream and the Danish fishermen

Nord Stream and the Danish fishermen

The case of Nord Stream and the Danish fishermen is an example of how to approach complex negotiations involving large groups of stakeholders at the national, supranational, and international levels.

The story

In 2009 Dirk von Ameln, permitting director of Nord Stream, was responsible for getting the national permits necessary to build an offshore natural gas pipeline between Vyborg in Russia and Greifswald in Germany − a priority project of the European Union linking the Russian gas transmission system and the gas network of the European Union. The pipeline could proceed on the condition that Nord Stream achieve a consensus with the 450 fishermen in the nine countries, whose boundaries are affected by the building of the pipeline in the Baltic Sea. Fishermen in the Baltic Sea had traditionally used fishing boats that trawled the seabed, and they were concerned that the pipeline would damage their trawlers and, thereby, their earnings.

The scale of the challenge

With €7.5 billion invested and work due to begin in 2010, Nord Stream was under pressure to achieve a deal within a tight time frame. The initial challenge for management was how to negotiate a sustainable deal with the 70 Danish fishermen that would compensate them fairly for any potential damage to their trawlers. The concern was that if they paid too much at the outset, then the cost of reaching a settlement with the remaining fishermen could be potentially enormous. In addition, the legal framework to obtain the permits was dealt with on national, supranational, and international levels. This meant that Nord Stream had the additional challenge of complying with many international legal conventions.

The negotiation process

Nord Stream started the negotiation process with the Danish fishermen, which then served as a model for subsequent negotiations. Although Nord Stream began the process with just three people, they realized very quickly that they needed to devote greater resources. In the end, they had almost 35 staff members dedicated to acquiring the permits and meeting all requirements under the various EU and UN conventions. Nord Stream also included the most important stakeholder – the fishermen – from an early stage to see if an alternative solution could be found. This cooperative approach resulted in a win-win situation for all concerned. Dirk von Ameln said, “The outcome was instead of just buying your way, we developed a solution that served all purposes, and at the same time came to a cost that was lower than what the fishermen asked for before. They actually got more than what they had thought to get.”

The lesson learned

The objective of this case is to teach participants how to apply a particular method for negotiation, how to define their interests and objectives, how to decide on a price, and finally to work out the cost of not achieving a deal. It can be also used to elaborate on different negotiation styles based on interests, rights, and power during a negotiation, and the implication of choosing one style over another. Christoph Burger, who worked with Nord Stream from the very beginning in writing this case, has produced a case study that gives an insight into the importance of choosing an appropriate negotiation style and method. This case teaches us that negotiation is not just about money and being fixed on a certain price. Focusing on interests instead of positions can create winning deals for all parties involved.

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